Commerzbank, Germany's third-largest bank, yesterday said it had no interest in buying all or part of BZW's equities and corporate finance businesses. The withdrawal means only France's Paribas has made public its interest and concerns are mounting that without a quick sale, the firm could lose staff, clients and credibility.
Barclays shares closed 20p lower at 1,627.5p yesterday after the announcement, having dipped as low as 1,595p. Commerzbank, which had been linked with the investment bank for months in City speculation, said BZW did not match its earnings expectations and it would not enter the bidding.
Insiders at BZW continued to warn yesterday that any further delay could prove fatal for the firm if it meant key staff and clients were lost. Headhunters have been swarming over BZW's staff since last week's announcement by Martin Taylor, Barclays' chief executive, that it had thrown in the towel in investment banking.
Goldman Sachs, which has been appointed to draw up a shortlist of buyers, is expected to have put together a full sales pack on the firm within three weeks. Securing a quick disposal is considered crucial to BZW's survival, with the bank unlikely to attract any new business while its ownership remains in doubt.
Staff remain irritated by the appointment of Goldman Sachs, which has put them in the position of having to give confidential client information to a rival firm. There continues to be surprise at the way the sale has been handled and the high risk of flagging up the intention to sell without first securing a buyer.
Commerzbank is expected to start cherry-picking key staff or teams from BZW to build its presence in London where it has lagged behind Deutsche Bank, which owns Morgan Grenfell, and Dresdner, parent of Kleinwort Benson.
There is thought to have been considerable interest in picking up parts of BZW, although senior insiders said yesterday they doubted whether a buyer could be found for all the businesses on sale at a decent price.
ING Barings and ABN Amro are seen as the leading contenders from continental Europe, with Credit Suisse, which has offices close to BZW's in Canary Wharf in London's Docklands, also mentioned. Credit Suisse is seen by analysts as a logical parent for BZW, with its strength in Europe balanced by the British firm's strength in UK equities.
The balance of probability is understood, however, to have swung towards a US buyer with JP Morgan a possibility and Travelers, owner of Smith Barney and now Salomon Brothers, an outside bet. Travelers yesterday refused to comment on a press report that it had had informal discussions with BZW before settling on a takeover of Salomon.